The most important part of estate planning is naming who will receive what assets from your estate. A beneficiary of your estate is the person you name. You may name more than one beneficiary in your will, or in your trust.
What happens if a beneficiary does not survive you? Estate planning is focused on being a step ahead of unexpected events. This includes identifying who should receive your predeceased beneficiary’s share. You may name more than one primary beneficiary, as well as contingent beneficiaries. Thus, a new will or trust need not be updated to replace the deceased designated beneficiary.
Be careful, there are different results when considering Pay on Death (POD) Transfer on Death (TOD) or joint named accounts. These designations control whom, at the surviving owner’s death, would receive the account policy funds. The will or trust does not control when the individual beneficiary is named on these accounts and policies.
Beneficiary designations in estate planning documents should be reviewed at important events like a death, birth, marriage, divorce, medical event, or retirement, or every five to ten years. If a beneficiary dies before you, check with your attorney to determine whether or not you named a contingent beneficiary.
Without a surviving beneficiary, there will be a default beneficiary assigned based on the internal policies of the custodian of the account, or what is written in your will or trust. The common default beneficiary is to allow the state in which probate occurs to assign who receives the account or policy. Your will or trust may not control the account or policy’s distribution. Without a will or trust, intestacy laws will determine the distribution when the beneficiary dies.
For assistance creating or updating a will or assigning beneficiaries or contingent beneficiaries, please contact us at (336)275-9567 for an appointment.